American Apparel founder and CEO hit with $250 million teen sex suit

March 9, 2011

New YorkCity -- Dov Charney, the controversial founder and CEO of American Apparel, has been hit with his most serious lawsuit to date. Charney, 42, who has previously dodged lawsuits claiming sexual harassment, as well as non litigious-claims about a sexually charged work environment, is being sued for $250 million in damages for allegedly forcing a teen employee to perform sexual acts.

The suit, filed Friday in Brooklyn, N.Y., accuses Charney of sexual harassment, retaliation, gender discrimination and creating a hostile workplace. It also names the clothing company and its board of directors as defendants for allegedly knowing about Charney's lewd behavior but not stopping it.

The details of the suit are explosive. It alleges that Charney took advantage of an underage employee, Irene Morales, to perform sexual acts on him. Morales, now 20, claims that Charney began with sexual advances when she was 17, and forced her to have sex when she first turned 18. For eight months, according to the suit, Charney continued forced sex with the girl, who was struggling financially, while also promising her a job advancement.

Morales later resigned, but the suit claims she suffered trauma and shame and was hospitalized for a nervous breakdown in 2008.

In a statement, American Apparel said Morales had left “without complaint and resigned with a letter of gratitude regarding her positive experience at the company” and alleged Morales and her lawyers were “engaged in an illegal conspiracy to extort money from American Apparel.”

The suit comes at a time when American Apparel is struggling amid faltering sales and losses. It has repeatedly warned in recent filings with the Securities and Exchange Commission of "substantial doubt" about its viability going forward.

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